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I'd like to ship beer across the United States as a business. What type of licenses do I need and what regulations should I follow? How do I go about acquiring said licenses?
Hello! Thank you for your question about shipping beer across the United States. I understand you would like to understand the process for shipping between California and Illinois specifically. The short version is that California and Illinois prohibit the direct shipment of alcohol to consumers, with the exception of wine. However, distributing beer between businesses is permitted. Licensure requirements and processes vary by state and by license type.
First, I have provided an overview of information on shipping beer in the U.S. and my methodology for approaching this question, including any information that I was unable to provide. You will find specific details in the body of my research.
OVERVIEW
The Granholm vs Heald ruling by the Supreme Court "made it possible for people to order alcohol, specifically wine online and have it shipped direct to their homes." As a result of this ruling, craft brewers are turning to the internet to ship their brews directly to customers as well. However, many states restrict the direct shipment of alcohol. Some states are beginning to reconsider their laws surrounding alcohol shipment. This report reflects the current state of the industry, with a focus on the California and Illinois laws and regulations.
Currently, the direct shipping of beer and liquor to the consumer is prohibited in most states, with only a few exceptions. Neither California nor Illinois permit the direct shipment of beer to consumers. Evidently, the push for direct shipping of beer has not been pushed in most states because it is not as cost-efficient as shipping wine. This is partially due to beer having a lower price point than wine. However, it is also due to high shipping costs. Also, there are the legislative problems as well. While the groundwork laid from the Granholm vs Heald ruling has the potential to be applied to the beer industry, it would "require years and years of lobbying efforts, working bills through state legislatures, mollifying industry members whose business operations could be upset (i.e. wholesalers), and fighting the inevitable lawsuits that would arise."
METHODOLOGY
First, I reviewed articles and sources that detailed the regulations of shipping alcohol in general, paying close attention to those that referenced beer specifically. This gave me some general regulations required, regardless of the states shipped to or from. Then, I focused on the specific regulations for California and Illinois, requested.
In the body of my research, you will find these permits/licenses for both states, shipping services available (with costs, if available), along with shipping regulations.
Since these regulations vary based on the license type, I was unable to include specific regulations for all licenses available. There are several that might be relevant to businesses shipping beer across state lines, but without further context of the type of business, it is impossible to determine the exact licenses required. Therefore, I have included the general licenses that may be necessary for selling and distributing beer in California and Illinois.
I mention a few other permits that may be necessary depending on the type of business you plan to open. Also depending on the type of business you open, there are different regulations for shipping between businesses and shipping directly to consumers. I mention these because it may be helpful in answering your question, but have not elaborated on these other permits.
Sections are organized in the order of steps required. Both California and Illinois had detailed instructions on applying for permits on their websites, so I have omitted those directions from my response, but have linked to them where appropriate.
I encourage you to submit additional requests for more information on these elements and we would be happy to follow up!
ACQUIRING PERMITS/LICENSES
In order to ship alcohol of any kind, first you must acquire appropriate permits and licenses. In general, you must be licensed to sell alcohol first and foremost. In some states, other licenses are required to import and distribute alcohol across state lines. Then, you must acquire an alcohol shipping agreement from shipping providers such as UPS and FedEx.
Depending on the type of business you are opening, you may also need basic permits to import, produce, or purchase for resale, as part of the FAA Act.
All permits and licenses to ship alcohol are dependent on compliance with the regulations of the FAA Act and the 21st Amendment.
In California:
-Must be a licensed importer (09 or 10) to bring alcoholic beverages into the state. This is an off-sale license.
-Must have a license to sell alcohol issued by the state. The type of license depends on the type of business, so appropriate codes should be found here. Usually, they are on-sale licenses, but some (like wholesaler licenses) are off-sale.
-Shipments directly to consumers are prohibited in California currently. The only exception is with wine.
-Internet-based retail of alcohol is tricky -- usually the problems caused have to do with inventory, which needs to be "displayed and available for convenient inspection and purchase by the general public." Usually this means having a brick-and-mortar shop as well as an online business. Also, inventory must be purchased from in-state sources.
-Permanent License
Applications can be found at the California ABC Website. They do suggest working with a local office on their website, since the application contents may vary depending on the type of business you have. In general, On and Off Sale Priority Permanent Licenses cost $13,800 to originate. It is not entirely clear by their website, but this seems to be an inclusive license, as long as all the appropriate license codes are included in the application. Please note, there is a priority drawing system to acquire this license, and the process can take a minimum of 55 days if no protests or denials are made. Last year's deadline was September 23, 2016. Fees are a little less clear with regards to individual licenses.
In Illinois:
-Must obtain a valid Illinois Retail Liquor License. This usually costs $750 and is in addition to a local liquor license. The process for acquiring a liquor license is detailed in this infographic on the Illinois Liquor Commission Control (ILCC) website.
-OR, you must obtain a distributor's license for in and out-of-state shipping, for which the cost varies based on volume. It is not clear if both of these licenses are necessary, or just one of them by their website.
There are numerous other special licenses that may be appropriate depending on the type of business. These also vary in cost. The applications for those licenses are linked next to where they are listed on the ILCC website.
For both states, the types of licenses have different provisions, based on the type of business you plan to operate. For example, there are different licenses for wholesalers than for regular beer distributors. So, even though you asked for the licenses required to ship beer, that depends upon how the beer will be used at the locations it is shipped to, as well as the method of original purchase or acquiring of inventory.
SHIPPING SERVICES
Once licensing has been taken care of, you will need to secure a shipping agreement with a shipping company.
The United States Postal Service (USPS) does not currently permit the shipping of any alcoholic beverages. However, UPS and FedEx both allow companies to ship beer, as long as you follow their specific regulations, which are outlined in the next section.
UPS:
-Must have UPS account and appropriate licenses/authorizations for both origin and destination states.
-Does not permit the delivery of beer directly to consumers.
-Packaging for beer must include "molded Expanded Polystyrene (EPS) foam, folded corrugated tray, or molded fiber tray" with sturdy, outer corrugated containers. Also, you must "secure the bottles into the center of the shipping container away from the side walls."
-Labeling must clearly identify the contents of the package contain alcohol.
-Shipment must be documented with a UPS compatible shipping solution and must have an adult over 21 with proper identification sign for it at its destination.
FedEx:
-Must have FedEx account and signing an alcohol shipping agreement with FedEx, along with having proper licenses and authorizations in both originating and destination states.
-Packing needs to be secure, including using soft materials to prevent glass breakage and liquid absorption capabilities in case of breakage.
These are the general regulations for each company. However, more specific regulations may be required depending on the individual contract with the shipping company. Both companies require you to contact them directly to begin the process of obtaining an alcohol shipping agreement.
CONCLUSION
To wrap up, the basic process for being able to ship beer across state lines in the U.S. includes acquiring the appropriate licenses and then entering into a contract or agreement with a shipping company. License regulations vary by license type and state, but appropriate versions must be acquired for both origination and destination states before proceeding. Currently, California and Illinois do not permit the direct shipment of beer and liquor to consumers.
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